Discussion in 'Strategy Development' started by Humpy, Oct 1, 2006.
Stops are for:-
2. the unwary
3. the unskilled
4. weekends and holidays
Stops are for everybody...
Personally I usually close my position for weekends in favour of having stops. As I spread-bet I think stops are their meat and drink. Its amazing how often their " market " swings by that extra few points that collects one's stop. Not that I would like to suggest underhand practices naturally.
Orignally I put wider stops but when these were triggered too - you can see what I am getting at perhaps. So as long as I am watching the markets I have no stops.
Have to be tough and self disciplined though or disaster !!
you mean you have mental stops? But for what? In a liquid market where your orders are not too big there is no need for mental stops. A stop lying at the exchange is alway faster than any trader can pull the trigger (if he can).
Stops are for highly leveraged traders. Don't use so much leverage and you will be able to place your stop outside reaction highs/lows which is where they should be. Your stops are misplaced if they are getting hit that frequently.
Once one has found or built a system that one can rely on surely it is better to exit the market when its obviously going the wrong way and the system indicates this.
Stops are so inflexible. Sometimes they take you out of the market and the market is turning. Or one can be too complacent that the stop will take one out of the market - but this can then be late and with more points lost.
No snoozing at the terminal !!
Why not use the stop-loss order as entry and exit criteria?
Hey, I can't believe it.. For what reasons do we use stops if not for taking us out of the maket when they got hit. Sure sometime it throws you out and then the market reverses again, but that is part of the game. Do it without stops and sooner or later you're out for a long, long time
Absolutely not true!!! Stops give the market-maker or specialist a target to take out. All great moves upward begin with the market-maker taking out the stops.
Hard stops should only be used while on vacation or at times when you are not close to a computer.
Edit: I am referring to everything but day-trading.
And all great disasters start that way too. How do you know the difference?
If we agree that one has to get out when the market goes in the contrary direction then what is the use of not using stops? Why take a risk and find yourself outguessing the market.
Stops are not 'taken out'. They just get hit. It's a psychological thing. If you get out too early don't blame the stop. A 'mental' stop wouldn't have done better.
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